Advertisement
  1. Archive

BAD BUSINESS // WASTED PURCHASING POWER

When it comes to shopping smart, Citrus County school officials need a lesson in how to save a buck.

The school district spends about $16-million a year on goods and services, making it one of the area's biggest consumers.

But instead of putting that economic muscle to its best use, the district for years has wasted tens of thousands of tax dollars, money that could have gone to hire teachers, buy books and build playgrounds.

A Times computer analysis of all 47,000 purchase orders the district has issued since fiscal year 1990-91 found:

Administrators, teachers and other employees failed to do what shoppers do every week at the grocery: buy in bulk to save money. By making millions of dollars of small, individual purchases without grouping the items and getting a discount, the district routinely misses out on huge savings.

The district violated its own guidelines by authorizing more than $1-million in purchases that should have been bid.

Some of the top recipients of unbid district business are former school employees and friends of school officials _ a seeming conflict of interest, but one difficult to avoid in a business community as small as Citrus County.

The official who until recently headed up the district's sprawling purchasing system never analyzed the district's spending practices to find ways to cut costs.

The total loss to taxpayers cannot be calculated. However, records show that by not bidding purchases, the district sometimes paid two, three and even four times more than the cheapest price available.

Take office supplies. In 1994, the district negotiated its first office supply contract and received a significant discount. Had a similar contract been in place since 1990, for example, the district could have saved an estimated $92,000, almost enough to hire three teachers.

School Board members, who must constantly scramble to find dollars for essential services and construction projects, said they were amazed by the Times' findings.

"Of course I'm upset," said School Board member Janet Herndon. "If we saved $250,000, would that have been peanuts? How many computers could it have bought? Maybe everyone could have a textbook now. For every time that we've been told that we didn't have enough money maybe we did.

"Think about how many warnings we've had, in the audits, and in all of the symptoms we've been shown," she said. "Citrus Springs was not an isolated incident. The Marine Science Station was not an isolated incident. Those were symptoms of a larger problem and instead of accepting that, we called them isolated incidents."

"It concerns me," said board member David Watson. "But I think we are taking steps to be sure that this isn't happening in the future."

Indeed, Superintendent James Hughes said the district has fixed many of the problems and is correcting others.

Hughes, who became superintendent in July when Carl Austin retired, said any failures are the result of understaffing. The chief purchasing agent, who has since been reassigned, for years had three other major responsibilities.

Austin said he thought his staff had been making good purchasing decisions. "I had faith in the personnel in the system," he said.

"We thought we were going through the proper channels. I thought we were following the appropriate procedures," Austin said. "We were getting a fiscal exam (by the auditors) every year and we were healthy."

State officials, however, have regularly criticized some of the district's purchasing procedures. They say Citrus should take a harder look at how it spends tax dollars.

"Whether they realize it or not, they're dealing with the public's money," said Buddy Barker, head buyer for the state's purchasing division. "They are totally accountable."

No bids, no bulk buying

July 1, 1993, was a busy day for Walt Connors' Inverness office supply store.

On that day, then-district purchasing agent Ed Murphy approved 22 separate buys from the store. Many of the requests were for the same things: pens, erasers, folders, etc.

The payment authorized for Connors that day totaled $8,600, which was nearly twice the $4,500 state threshold at the time for purchasing without a bid.

But because each purchase was approved individually, no bids were sought.

It was a prime example of what auditors had criticized the district for just three months earlier: No one was making sure the district was buying in bulk to save tax dollars.

In effect, the district was buying corn flakes one flake at a time.

On that single day, for instance, three different schools bought 26 bottles of correction fluid for prices ranging from $1.43 to $1.79 each. They could have bought them through a state bulk purchase contract for 50 cents each.

Small purchases, certainly. But they add up: In the 1993-1994 fiscal year, for instance, Connors was given $56,931 in purchase orders. Since 1990, he has averaged $48,364 a year in unbid orders from the school system.

State auditors repeatedly criticized the amount of unbid business the district did with Connors, a prominent political and business figure in Citrus County.

In 1994, the district finally bid an office supplies contract and received a 48 percent discount from the winner, Ernie Morris Enterprises of Sumter County.

Connors bid on the contract, too, offering a smaller discount. He lost.

There are other areas where the district could save thousands of dollars by bulk buying: For example, mechanics routinely buy commonly needed parts such as oil filters from local auto shops. Maintenance workers buy paint, fencing material and tools piece by piece.

The pattern holds for bigger-ticket items as well.

In recent years, the district has bought many of its computers from one man: Robert Zontini, a former school district employee who now runs a company called Computer Consultants from his home in the Inverness Highlands.

Of the $370,000 authorized for Zontini over the past few years, two-thirds has been without a competitive bid.

Though Zontini's prices are comparable to larger, national vendors, school officials never looked into possible savings by buying their computers in bulk.

Nancy Rivers, the director of finance, said the district has bought certain items from the state contract, such as buses and textbooks.

And the district now buys more goods and services in bulk. Contracts are being drawn up for pest control, produce and air filters to save money through bulk purchasing, she said.

Rivers took over purchasing duties last year after Murphy, who had been the chief purchasing agent for more than a decade, was stripped of that authority after a controversy over the way the Citrus Springs Elementary School painting project had been handled.

For the first time, the district has sent someone to an annual conference to find out just what products are available cheaply through state contracts. They also are using a computer to browse through a data base of state contracts.

When asked why school officials didn't do that sooner, Rivers was silent a moment.

"I can't answer that question," she said.

If school officials weren't sweating the small stuff, you would think the big buys would have commanded their full attention.

Not so.

The Times' review of $57-million worth of purchase orders that were over the bid levels in the past five years shows that the district authorized $1-million worth of contracts that should have been bid.

School administrators said they believed some of the contracts had been bid or were bought through state contracts. However, they could find no records to support those claims.

Two other areas stood out: the district's maintenance department and its food services department.

School officials said tens of thousands of unbid food contracts were an innocent mistake. Although state rules provide exemptions for food products from the bidding process, federal rules do not. Rivers said the purchasing department did not know about the federal guidelines until this summer.

In the maintenance area, Rivers explained that after former director Buist Chitty left the system, his position stayed vacant until Tom Williford was given control of the area. A new hire, Williford had his hands full overseeing a host of construction projects, she said.

"It may not have been best for the system, but it was just the reality," Rivers said.

Concerns since 1990

For the Citrus County School Board, $10,000 is a magic number.

If a principal, teacher or administrator decides to buy something that costs more than that, they are supposed to follow procedures set up by the state and the School Board to make sure tax dollars are well spent.

For example, if a principal wants to buy computers, she asks permission from the district. If administrators approve her request, she can bypass the bidding process and buy directly from a state contract.

The state bids out hundreds of millions of dollars in contracts every year for items that all districts need, from buses to rubber bands. In effect, the state buys in bulk so that school districts don't have to.

Overall, products and services purchased off the state bid list are an average 23 percent cheaper than if those products were bought individually.

But, if the principal doesn't want the state contract computer _ perhaps it's the wrong type _ the School Board will advertise the contract and award it to the lowest and best bidder.

At least, that's the way the system is supposed to work.

Since 1990, state auditors have criticized the Citrus school district regularly for the way it handles purchases.

The criticism grew fierce after auditors reviewed how the district handled repairs to the Marine Science Station following the March 1993 no-name storm. Then-superintendent Austin gave Carl Rise, an independent contractor, a contract worth $133,000 to rebuild the station without seeking bids.

Austin defended his actions, saying the repairs were needed immediately and the district could not wait to go through the bid process. As for suggestions that he showed favoritism toward Rise, who once built a pole barn on Austin's property, the superintendent pointed out that Rise had helped build the station and had done other work for the district.

The audits, though, lack teeth: The only penalty is bad publicity. School officials are not obligated to correct what's wrong.

The audit did lead to a change in district policies, including adding specific rules for emergency purchases. At the same time, a change in the state law allowed the district to increase the bid threshold from $4,500 to $10,000.

But major changes in how the district handles bids only came last fall, after the Times revealed that school officials had failed to get bids for a $50,000 painting project at Citrus Springs Elementary School.

Following that controversy, Hughes took purchasing authority from Murphy. Another administrator was reprimanded, and the chief of the district's business services abruptly retired.

Hughes ordered a review of purchases, which showed that the district failed to bid more than $225,000 during the 1994-95 fiscal year. "These were mistakes and they should not have been made," Hughes said at the time.

Growth "a painful process'

So, what went wrong?

During the past decade, the district's budget more than doubled from $40-million to more than $100-million. The purchasing system never grew with it.

Teachers, principals and janitors were forced to play the role of shopper. They were supposed to contact stores and get the best price. Usually, they were unaware that another school was buying the same thing or that the items could be bought cheaper from state contracts.

It grew to a $16-million-a-year task, yet school officials never made it one person's sole responsibility. Instead, it fell to Murphy, who had three other major roles as well: transportation director, chief labor negotiator and risk manager.

Murphy said that juggling four jobs made it difficult to see patterns among the blur of 40 purchase orders he signed on a typical day.

Computer programs and other tools were available to help Murphy analyze district purchases or track state contracts, but Murphy never learned to use them. Nor did he call for a districtwide review that might have helped bring the purchasing system under control.

District policy states that the purchasing agent is responsible for "periodically estimating the needs of the school system in standard items and making quantity purchases."

"We provided the best that we could for the teachers and students of the district working with what we had to work with," Murphy said.

When asked if the schools were getting the best prices on what they bought, Murphy said, "I'm not going to be the judge of whether a school is out there doing that."

School officials say they are fixing the problems in the purchasing department. They have added staffers and instituted procedures to make sure taxpayer money is spent more wisely.

"We're no longer a small school district. We're growing," Rivers said. "This is a painful process. We're learning and our procedures are changing accordingly."

Rivers said the department is now following proper procedures. In fact, she said many of the problems the Times found have been corrected.

When asked why the problems were allowed to continue for five years _ despite repeated criticism from state auditors and early signs of problems in the purchasing department _ school officials again had no answer.

"Every time we've been cited, we've taken actions," Rivers said. "In their review, none of this came out."

Former superintendent Austin said the same thing.

"Never did they find 10 cents that was misplaced," he said. "I was fairly comfortable with what was going on."

When school buying patterns didn't yield the best values

Citrus school officials didn't always pay attention to getting the best price by buying in bulk. As a result, they made lots of small purchases that, when added up, exceeded the bid limit. Here's an example from the 1992-93 school year, when the bid limit was $4,500:

+ Months when money spent was over bid limit.

COMPANY JULY '92 AUG.'92 SEPT. '92

Walt Connors Inc. $5,746.06 + $10,336.26 + $9,389.79 +

Computer Consultants $5,648.00 + $4,460.00 $10,098.05 +

R.G. Printing Co. $6,428.75 + $7,423.92 + $1,462.60

Southern Truck

Equipment Service $98.17 $2,003.91 $3,371.10

Coast Brothers Inc. $4,663.70 + $2,280.80 $1,451.52

Jim & Slim's Tool

Supply $3,091.80 $2,144.00 $4,811.73 +

Lowes of Inverness $1,590.50 $178.36 $4,680.89 +

Stype Termite &

Pest Control $2,960.00 $2,350.00 $1,588.00

CRC Fence & Garden $3,438.81 $2,227.68 $2,576.20

Max Davis Associates

Supplies $2,365.52 $9,157.54 + $1,742.56

Sunshine Materials Inc. $3,486.00 $2,259.30 $114.21

Citrus Computer Center $487.15 $1,675.95 $2,901.04

Johnson's Paint & Paper $3,586.11 $4,007.14 $937.82

Hannie Printing Inc. $2,630.50 $2,976.50 $3,695.00

COMPANY OCT. '92 NOV.'92 DEC. '92

Walt Connors Inc. $3,546.45 $2,709.78 $2,902.86

Computer Consultants $2,700.00 $4,024.00 $2,468.00

R.G. Printing Co. $841.55 $129.46 $3,284.90

Southern Truck

Equipment Service $3,022.86 $1,010.21 $595.49

Coast Brothers Inc. $1,167.24 $1,878.75 $2,102.70

Jim & Slim's Tool

Supply $3,209.95 $1,538.19 $724.35

Lowes of Inverness $1,952.33 $1,692.68 $1,956.19

Stype Termite &

Pest Control $1,055.00 __ $3,020.00

CRC Fence & Garden $291.34 $2,388.70 $550.00

Max Davis Associates

Supplies $1,520.40 $1,507.35 $220.08

Sunshine Materials Inc. $3,557.28 __ $3,032.67

Citrus Computer Center $3,573.35 $417.95 $1,398.10

Johnson's Paint & Paper $1,664.20 $1,007.06 $1,774.05

Hannie Printing Inc. $1,361.00 $392.00 $1,097.00

COMPANY JAN. '93 FEB.'93 MAR. '93

Walt Connors Inc. $2,090.30 $4,150.97 $2,003.64

Computer Consultants $1,906.30 $8,060.00 + $171.00

R.G. Printing Co. $1,928.22 $1,571.75 $1,821.84

Southern Truck

Equipment Service $4,272.17 $5,654.89 + $2,871.90

Coast Brothers Inc. $1,548.00 $4,578.80 + $2,316.60

Jim & Slim's Tool

Supply $3,701.82 $1,691.00 $1,847.90

Lowes of Inverness $2,363.93 $1,888.97 $3,285.36

Stype Termite &

Pest Control $1,255.00 $1,870.00 $2,800.00

CRC Fence & Garden $21.00 $3.80 $1,998.30

Max Davis Associates

Supplies $110.04 $1,578.34 $5,118.16 +

Sunshine Materials Inc. $2,276.94 $120.00 $454.15

Citrus Computer Center $2,782.75 $3,595.75 $2,598.95

Johnson's Paint & Paper __ $3,571.30 $1,000.00

Hannie Printing Inc. $246.00 $667.50 $2,035.50

COMPANY APR. '93 MAY.'93 JUNE '93

Walt Connors Inc. $3,137.97 $2,529.00 $319.43

Computer Consultants $7,437.00 $1,885.00 __

R.G. Printing Co. $2,312.65 $4,817.01 + $3,258.35

Southern Truck

Equipment Service __ $4,000.00 $1,883.77

Coast Brothers Inc. __ $5,844.32 + __

Jim & Slim's Tool

Supply $113.88 $1,991.10 $1,091.51

Lowes of Inverness $2,923.92 $3,435.83 __

Stype Termite &

Pest Control $6,000.00 $1,900.00 __

CRC Fence & Garden $2,012.60 $5,944.49 + $2,849.08

Max Davis Associates

Supplies __ $315.60 __

Sunshine Materials Inc. $36.00 $3,200.00 $4,300.00

Citrus Computer Center $2,604.85 $454.00 $40.80

Johnson's Paint & Paper $1,000.00 $3,000.00 __

Hannie Printing Inc. $4,387.00 $704.00 __

COMPANY TOTAL '92-'93 NO.

Walt Connors Inc. $48,862.51 258

Computer Consultants $48,857.35 45

R.G. Printing Co. $35,081.00 49

Southern Truck

Equipment Service $28,784.47 35

Coast Brothers Inc. $27,832.43 25

Jim & Slim's Tool

Supply $25,957.23 57

Lowes of Inverness $25,948.96 69

Stype Termite &

Pest Control $24,798.00 13

CRC Fence & Garden $24,302.00 43

Max Davis Associates

Supplies $23,635.59 28

Sunshine Materials Inc. $22,836.55 20

Citrus Computer Center $22,530.64 39

Johnson's Paint & Paper $21,547.68 12

Hannie Printing Inc. $20,192.00 58

Source: School records, Times research

Winners in unbid contracts

Citrus County school officials routinely failed to buy in bulk. That meant that some vendors won hundreds of thousands of dollars without the benefit of competitive bidding. Here's a list of the top 25 winners of unbid money since 1990.

NAME AMOUNT NO. ORDERS

COMPUTER CONSULTANTS $263,367.85 171

CARL RISE, GENERAL CONTRACTOR $254,860.00 20

WALT CONNORS INC $241,822.69 1,093

R G PRINTING CO $225,570.32 318

C R C FENCE & GARDEN $143,219.81 206

SUNSHINE MATERIALS INC $139,620.75 116

CITRUS COMPUTER CENTER $134,777.14 234

COAST BROTHERS INC $132,539.18 101

WAL MART 1104 $132,043.93 925

STYPE TERMITE & PEST CONTROL $131,591.00 84

SOUTHERN TRUCK EQUIP SERVICE $122,565.53 143

LOWES OF INVERNESS $108,872.33 303

NAPA AUTO PARTS $100,777.16 309

HELTON ELEC MOTOR & HARDWARE $97,229.99 155

ROYAL CROWN BOTTLING $92,900.00 8

HANNIE PRINTING INC $89,945.43 247

JIM & SLIMS TOOL SUPPLY $86,155.52 156

LEWIS PAINT COMPANY $84,359.39 48

CRYSTAL PAINT & DECORATING INC $83,489.73 69

KASH N KARRY $79,512.61 343

BAKER BROS INC $77,706.93 109

FOLSOM BUSINESS FORMS $77,538.86 64

JOHNSONS PAINT & PAPER $76,239.60 42

DECONNA ICE CREAM COMPANY $75,200.00 16

Source: School records, Times research

Citrus County School officials often didn't get the best price when they bought supplies. Sometimes, they could have paid less by buying from the state. Other times, they could have gotten a better deal simply by shopping around more. Here's a price comparison for the 1994-1995 school year:

EPSON 1100 HEWLET 9-VOLT

LASER PRINTER PACKARD 540 BATTERIES

State Contract $402 --- 53

Computer Consultants $495 $330 ---

Wal-Mart --- $287 99

Walt Connors --- --- ---

4-HEAD VCR WHITE-OUT

State Contract $205 50

Computer Consultants --- ---

Wal-Mart $229-$259 ---

Walt Connors --- $1.43

Source: School records, Times research

YOU MIGHT ALSO LIKE

Advertisement
Advertisement